Founded during the Great Depression

Two years after the Wall Street Crash of 1929, the US was grappling with the worst depression in its history. More than 40% of US banks had closed and one out of every four Americans were out of work. It was against this bleak backdrop that Jonathan Bell Lovelace, an investment professional who had honed his research techniques in the roaring '20s with a Detroit investment firm, decided to set up his own business in California. His vision was to build an investment company that recognised the importance of value, solid research and maintaining a long-term perspective – principles that had helped him avoid the worst of the stock market slump of 1929.

The beginnings of global investing

Capital becomes one of the first investment managers to invest globally. Its first investment outside the US was in oil company Royal Dutch, which later became Royal Dutch Shell. The principles that underpinned the global approach back then are even more relevant today: investing across the broadest possible range of securities can help to deliver superior, more consistent returns.

The birth of a distinctive investment process

Capital creates and implements an approach to managing investments that blends teamwork with individual accountability: The Capital System℠. By dividing assets among several portfolio managers, The Capital System℠ allows each manager the freedom to invest according to his or her strongest convictions. The disciplined-yet-flexible approach is aimed at tempering volatility, which provides continuity in portfolio management and could enhance long-term results.

Putting the CI into MSCI

Drawing on its expertise in global investing, Capital creates the first ever global stock indices. Later sold to Morgan Stanley, these became the MSCI - probably the most recognisable and widely-used family of investment indices in the world.*

*MSCI indices are now maintained by MSCI, Inc.

Expanding into fixed income

Broadening the range of its investment services, Capital begins managing fixed income assets in dedicated bond portfolios. Today, the company manages more than US$200 billion in fixed-income assets*, making it one of the largest bond managers in the world.

* Assets managed by Capital Fixed Income Investors. The Capital Group companies manage equities through three investment divisions that make investment and proxy voting decisions independently. Fixed-income investment professionals provide fixed-income research and investment management across the Capital organisation; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

Two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to repay the principal and make interest payments.

Under extreme market conditions, liquidity in bond markets may fall significantly without warning and it may not be possible for you to realise your investment.

An emerging markets pioneer

Capital Group (formerly Capital International) is asked by the International Finance Corporation, an affiliate of the World Bank, to help set up a fund that allows institutions to invest in emerging markets. This leads to the creation of the Capital International Emerging Markets Growth Fund*, the first of its kind in the world.

Emerging markets are volatile and may suffer from liquidity problems.

* Emerging Markets Growth Fund is a US-domiciled open-end interval fund generally offered to institutional investors and other “qualified purchasers” in the US by Capital International, Inc. American Funds are not registered for sale outside of the United States.

Leading the way in private equity

With the global economy recovering from recession in 1992, Capital launched its first private equity fund. At that time, the market was very much in its infancy with only about US $10 billion in committed private equity investments worldwide. Since then, Capital has gone on to launch four more private equity funds, investing in more than 70 companies that operate in emerging markets across Asia, Africa, Latin America and the Middle East.

Building research resources in China and India

Capital opens research offices in Mumbai, India, and Beijing, China, which adds to its extensive network of analysts across the world. These developments also enhance Capital's ability to find and support investment opportunities in some of the world’s fastest-expanding markets.